EU Pay Transparency Directive implementation

The European Union is implementing a directive designed to reduce gender-based wage gaps by increasing transparency in recruitment and compensation. Under the new regulations, employers must ensure job advertisements are gender-neutral and are prohibited from asking applicants about previous salaries. Companies will be required to provide information regarding intended compensation before the first interview, with mandatory reporting expected to begin in 2027.

In Lithuania, legislative updates driven by EU Directive 2023/970 became effective in June 2026. These reforms prohibit employers from asking candidates about salary history to prevent the inheritance of lower wages from past discrimination. Furthermore, confidentiality clauses preventing employees from discussing pay have been removed. The reforms also expand employer liability by removing the six-month limit on penalties for delayed wage payments, specifically including violations of equal pay principles.

In Germany, a survey of approximately 300 companies indicates that the directive is creating financial and organizational pressure. Over 52 percent of respondents expect rising labor costs, while 70.2 percent fear internal workforce unrest. Many German firms appear unprepared, with 41.8 percent having not yet begun preparations.

Significant pay disparities persist across the continent. In Austria, where the gender pay gap for full-time workers is 15.5 percent, a draft law has been proposed requiring companies with over 100 employees to submit income reports, though federal implementation of the EU directive remains pending. In Hungary, the gap is 16.9 percent, and in France, women earn an average of 11.8 percent less than men.